In the last year, there has been an increase in institutional investment in cryptocurrencies, as even some prominent banking institutions like Goldman Sachs and JPMorgan have diversified their businesses into crypto-related offerings. However, it does not seem that private banks consider crypto a priority, as this is apparent in a survey conducted by the US Federal Reserve recently.
No priority for crypto
The US central bank recently conducted a survey of one of the largest banks in the country in order to gain insight into the interest that financial institutions may have in cryptocurrencies. Plus, it also wanted to get an idea of their plans for crypto products and services.
There were a total of 80 CFOs that participated in the US Federal Reserve survey and its results showed that about 66% of them are more than willing to use the distributed ledger technology (DLT). However, the survey further disclosed that banks do not consider products related to crypto, or decentralized finance (DeFi) a priority in terms of achieving economic growth in the long term.
According to the Federal Reserve, it had also questioned the respondents about the practices implemented by their respective institutions for liquidity management, both in the short-term and in the long-term. The responses showed that the liquidity management of banks was not affected significantly due to crypto and blockchain technologies.
But, it should be noted that one quarter of the respondents stated that they were prioritizing blockchain technology as well as other DLT technologies because these could come in handy for improving their infrastructure. In addition, some of the respondents said that they had evaluated the blockchain and crypto sphere and would be willing to integrate them into their system if required.
Central banks all over the globe have been looking into the idea of launching their own central bank digital currency (CBDC). As opposed to other central banks, the US Federal Reserve has not been too keen on the idea and is not ready to pursue it so quickly. It has been asserted that this is because they want to avoid any mistakes during the launch.
Jerome Powell, the chairman of the US Federal Reserve, said last month that they were set to introduce a CBDC after they had seen the massive growth in stablecoins and crypto tokens. However, he said that they were assessing if a CBDC could help in improving the efficiency and safety of the local payment system.
Moreover, the chairman also added that launching a CBDC could also help the Fed in preserving the role and importance of the US dollar in the global market. Regulatory authorities in the country are also looking into the benefits of web 3.0 and other crypto technologies for ensuring that the US dollar continues to maintain its position as the reserve currency of the world.
As far as the CBDC launch is concerned, other countries like China have made a great deal of progress in terms of its development.